OST-97-2578 / Polar Air / June 2, 1997

Application of

for all-cargo frequency allocation (U.S. - Argentina)

DATED: June 2, 1997

Polar Air Cargo, Inc. ("Polar Air") hereby requests allocation of the two weekly U.S.-Argentina narrow body all-cargo frequencies originally awarded to Challenge Air Cargo, Inc. ("Challenge") which to the best of Polar Air's knowledge and belief have been unused by Challenge for more than 90 days. Polar Air would combine these frequencies with the two frequencies it already holds in order to operate a total of two round trip B-747F flights per week. /1 In support of its application, Polar Air states as follows:

1. By Order 95-3-30 issued March 20, 1995, Polar Air was awarded two weekly U.S.-Argentina narrow body all-cargo frequencies. Polar Air began service to Argentina in October, 1995 with two narrow body flights per week.

1/ Each operated with B-747F aircraft requires two narrow-body frequency allocations.

2. Challenge was subsequently awarded two weekly narrow body all-cargo frequencies, the last of which on December 1, 1996. (Order 95-3-30) Based on inquiries in Argentina, it appears that Challenge has not utilized one or both frequency allocations for more than 90 days. Under the terms of the allocation of the Argentina frequencies, they automatically expire, and the authority reverts to the Department for reallocation, in the event they are not used for a period of 90 days. /2 If Challenge has not utilized its frequencies since February 25, 1997, they are now available for reallocation.

3. Polar Air has a pressing need to increase the frequency of its Argentina scheduled service, if it is to succeed in establishing a viable competitive presence in the market. Polar Air has already incurred $3 million in losses in developing a foothold in Argentina. Despite southbound load factors that averaged 89 percent in the months of March and April, Polar Air's single weekly service is not profitable, primarily because higher yielding freight gravitates toward the much more frequent services of Federal Express. A second weekly frequency would help to offset that disadvantage as well as permit the carrier's fixed costs in Argentina to be supported by a much larger revenue base.

4. Grant of this application is in the public interest. By operating two wide body flights per week, Polar Air could compete more effectively with Federal Express (the largest

carrier to Argentina) which has recently announced its intention to acquire frequencies in order to convert its five narrow body flights per week to five wide body flights. /3 Without the additional frequencies, Polar Air is at a significant competitive disadvantage and may not be able to maintain a presence in the U.S.-Argentina market. A Polar Air termination of service to/from Argentina, could leave Federal Express with an effective monopoly in this market. /4

WHEREFORE, on the basis of the foregoing, Polar Air Cargo, Inc. requests allocation of the two weekly U.S.-Argentina narrow body all cargo frequencies originally

4/ Arrow terminated service on March 25, 1997. Florida West operates one narrowbody frequency per week but has contracted to sell that allocation to Federal Express.

awarded to Challenge Air Cargo, Inc., and such further and other relief as the Department may deem in the public interest.

Respectfully submitted,

Alfred J. Eichenlaub

Lisa A. Harig

GINSBURG, FELDMAN

1250 Connecticut Avenue, N.W.

Suite 700

Washington, D.C. 20036

(202) 637-9034

Attorneys for POLAR AIR CARGO, INC.

DATED: June 2, 1997